CALIFORNIA SOFTWARE CORPORTATION
EXHIBIT #2.I
Asset Purchase Agreement with California Software Products, Inc.
Asset Purchase Agreement
This Asset Purchase Agreement (the "Agreement") is made and entered
into this 12th day of January, 1999, by and between California Software
Products, Inc., a California corporation ("Seller") and California Software
Corporation, a Nevada corporation ("Buyer").
RECITALS
A. Seller is the owner of certain assets and accounts payable, a
complete list of which is attached hereto and incorporated herein by reference
as Exhibit A (the "Assets").
B. Buyer desires to purchase and acquire from Seller such Assets, and
Seller desires to transfer and convey the same to Buyer, in accordance with the
terms and conditions of this Agreement.
C. Contemporaneously with the closing (as hereinafter defined), Buyer
and Seller will enter into an agreement not-to-compete (the form of which is
attached hereto as Exhibit B).
NOW, THEREFORE, in consideration of the mutual representations,
warranties and covenants contained herein, and on the terms and subject to the
conditions herein set forth, the parties hereby agree as follows:
ARTICLE I
Definitions
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As used in this Agreement, the following terms shall have the meanings
set forth below:
1.1 Closing. "Closing" shall mean the closing of the transaction
contemplated by this Agreement, which shall occur at 5:00 p.m., Pacific Standard
Time, on the Closing Date in the offices of Seller, or at such other time and
place as shall be mutually agreed in writing by the parties hereto.
1.2 Closing Date. "Closing Date" shall mean January 12, 1999, unless
otherwise mutually agreed in writing by the parties hereto.
1.3 Assets. "Assets" shall mean all rights and interests in the
patents, copyrights, trademarks, trade names, etc. concerning the assets listed
at Exhibit A hereto, as well as the accounts payable listed at Exhibit A hereto.
ARTICLE II
Purchase and Sale
-----------------
2.1 Sale and Purchase of Assets. Subject to and upon the terms and
conditions contained herein, at the Closing, Seller shall sell, transfer,
assign, convey, and deliver to Buyer, free and clear of all liens, claims and
encumbrances, and Buyer shall purchase, accept and acquire from Seller the
Assets.
2.2 Purchase Price. The total purchase price for the Assets shall be
TWO MILLION TWO HUNDRED FIFTY THOUSAND DOLLARS ($2,250,000.00), payable by Buyer
to Seller in the form of a note convertible into common shares of Buyer. The
Note shall be substantially in the form of Exhibit 2.III attached hereto.
2.3 Instruments of Transfer; Further Assurances.
(a) At the Closing, Seller shall deliver to Buyer:
(i) An assignment of each Asset, in form and
substance satisfactory to Buyer;
(ii) An agreement not-to-compete, substantially in the
form of Exhibit B attached hereto; and
(iii)Such other instrument or instruments of transfer
as shall be necessary or appropriate, as Buyer
shall reasonably request, to vest in Buyer good
and marketable title to the Assets.
(b) At the Closing, Buyer shall deliver to Seller:
(i) A Note, substantially in the form of Exhibit
attached hereto; and
(ii) Such other instrument or instruments as shall be
necessary or appropriate, as Seller shall
reasonably request.
ARTICLE III
Representations and Warranties of Buyer
---------------------------------------
Buyer represents and warrants that the following are true and correct
as of this date and will be true and correct through the Closing Date as if made
on that date:
3.1 Organization and Good Standing. Buyer is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Nevada, with all the requisite power and authority to carry on the business in
which it is engaged, to own the properties it owns and to execute and deliver
this Agreement and to consummate the transactions contemplated hereby.
3.2 Authorization and Validity. The execution, delivery and performance
by Buyer of this Agreement and the other agreements contemplated hereby, and the
consummation of the transactions contemplated hereby, have been duly authorized
by Buyer. This Agreement and each other agreement contemplated hereby have been
or will be prior to Closing duly executed and delivered by Buyer and constitute
or will constitute legal, valid and binding obligations of Buyer, enforceable
against Buyer in accordance with their respective terms.
3.3 No Violation. Neither the execution and performance of this
Agreement or the other agreements contemplated hereby, nor the consummation of
the transactions contemplated hereby or thereby, will (a) conflict with, or
result in a breach of the terms, conditions and provisions of, or constitute a
default under, the Articles of Incorporation or Bylaws of Buyer or any
agreement, indenture or other instrument under which Buyer is bound, or (b)
violate or conflict with any judgment, decree, order, statute, rule or
regulation of any court or any public, governmental or regulatory agency or body
having jurisdiction over Buyer or the properties or assets of Buyer.
3.4 Consents. No authorization, consent, approval, permit or license
of, or filing with, any governmental or public body or authority, any lender or
lessor or any other person or entity is required to authorize, or is required in
connection with, the execution, delivery and performance of this Agreement or
the agreements contemplated hereby on the part of Buyer.
ARTICLE IV
Representations and Warranties of Seller
----------------------------------------
Seller represents and warrants that the following are true and correct
as of this date and will be true and correct through the Closing Date as if made
on that date:
4.1 Organization and Good Standing. Seller is a corporation duly
organized, validly existing and in good standing under the laws of the State of
California, with all the requisite power and authority to carry on the business
in which it is engaged, to own the properties it owns and to execute and deliver
this Agreement and to consummate the transactions contemplated hereby.
4.2 Authorization and Validity. The execution, delivery and performance
by Seller of this Agreement and the other agreements contemplated hereby, and
the consummation of the transactions contemplated hereby, have been duly
authorized by Seller. This Agreement and each other agreement contemplated
hereby have been or will be prior to Closing duly executed and delivered by
Seller and constitute or will constitute legal, valid and binding obligations of
Seller, enforceable against Seller in accordance with their respective terms.
4.3 Title. Seller has good and marketable title to the Assets which are
the subject of this Agreement. Upon consummation of the transactions
contemplated hereby, Buyer shall receive good, valid and marketable title to all
the Assets free and clear of all liens, claims, and encumbrances.
4.4 Commitments. Except as set forth in Exhibit D, Seller has not
entered into, nor are the Assets or the business of Seller bound by, whether or
not in writing, any (i) partnership or joint venture agreement; (ii) deed of
trust or other security agreement; (iii) guaranty or suretyship, indemnification
or contribution agreement or performance bond; (iv) employment, consulting or
compensation agreement or arrangement, including the election or retention in
office of any director or officer; (v) labor or collective bargaining agreement;
(vi) debt instrument, loan agreement or other obligation relating to
indebtedness for borrowed money or money lent to another; (vii) deed or other
document evidencing an interest in or contract to purchase or sell real
property; (viii) agreement with dealers or sales or commission agents, public
relations or advertising agencies, accountants or attorneys; (ix) lease of real
or personal property, whether as lessor, lessee, sublessor, or sublessee; (x)
agreement relating to any material matter or transition in which an interest is
held by a person or entity which is an affiliate of Seller; (xi) powers of
attorney; or (xii) contracts containing noncompetition covenants.
4.5 Adverse Agreements. Seller is not a party to any agreement or
instrument or subject to any charter or other corporate restriction or any
judgment, order, writ, injunction, decree, rule or regulation which materially
and adversely affects or, so far as Seller can now foresee, may in the future
materially and adversely affect the business operations, prospects, properties,
assets or condition, financial or otherwise, of Seller.
4.6 No Violation. Neither the execution and performance of this
Agreement or the other agreements contemplated hereby, nor the consummation of
the transactions contemplated hereby or thereby, will (a) conflict with, or
result in a breach of the terms, conditions and provisions of, or constitute a
default under, the Articles of Incorporation or Bylaws of Seller or any
agreement, indenture or other instrument under which Buyer is bound, or (b)
violate or conflict with any judgment, decree, order, statute, rule or
regulation of any court or any public, governmental or regulatory agency or body
having jurisdiction over Seller or the properties or assets of Seller.
4.7 Consents. No authorization, consent, approval, permit or license
of, or filing with, any governmental or public body or authority, any lender or
lessor or any other person or entity is required to authorize, or is required in
connection with, the execution, delivery and performance of this Agreement or
the agreements contemplated hereby on the part of Seller.
4.8 Compliance with Laws. There are no existing violations by Seller of
any applicable federal, state or local law or regulation, except to the extent
that any such violations would not have a material adverse effect on the
property or business of Seller.
4.9 Accuracy of Information Furnished. All information furnished to
Buyer by Seller is true, correct and complete in all material respects. Such
information states all material facts required to be stated therein or necessary
to make the statements therein, in light of the circumstances under which such
statements are made, true, correct and complete.
4.10 Proceedings. No action, proceeding or order by any court or
governmental body or agency shall have been threatened in writing, asserted,
instituted or entered to restrain or prohibit the carrying out of the
transactions contemplated by this Agreement.
ARTICLE V
Indemnification
---------------
5.1 Seller's Indemnity. Subject to the terms of this Section, Seller
hereby agrees to indemnify, defend and hold harmless Buyer and its officers,
directors, agents, attorneys, accountants and affiliates from and against any
and all losses, claims, obligations, demands, assessments, penalties,
liabilities, costs, damages, reasonable attorneys' fees and expenses ("Damages")
asserted against or incurred by Buyer by reason of or resulting from a breach by
Seller of any representation, warranty or covenant contained herein, or in any
agreement executed pursuant thereto.
5.2 Buyer's Indemnity. Subject to the terms of this Section, Buyer
hereby agrees to indemnify, defend and hold harmless Seller and its officers,
directors, agents, attorneys, accountants and affiliates from and against any
and all losses, claims, obligations, demands, assessments, penalties,
liabilities, costs, damages, reasonable attorneys' fees and expenses ("Damages")
asserted against or incurred by Seller by reason of or resulting from a breach
by Buyer of any representation, warranty or covenant contained herein, or in any
agreement executed pursuant thereto.
5.3 Remedies Not Exclusive. The remedies provided for in this Section
shall not be exclusive of any other rights or remedies available by one party
against the other, either at law or in equity.
ARTICLE VI
Termination
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6.1 Termination for Cause. This Agreement may be terminated prior to
Closing upon notice to the other party at any time by a party if any
representation or warranty of the other party contained in this Agreement or in
any certificate or other document executed and delivered by one party to the
other is or becomes untrue or breached in any material respect or if one party
fails to comply in any material respect with any covenant or agreement contained
herein, and any such misrepresentation, breach or noncompliance is not cured,
waived, or eliminated before Closing.
6.2 Termination Without Cause. Anything herein or elsewhere to the
contrary notwithstanding, this Agreement may be terminated and abandoned at any
time without further obligation or liability on the part of any party in favor
of any other by mutual consent of Purchaser and Seller.
ARTICLE VII
Miscellaneous Provisions
------------------------
7.1 Amendment and Modification. Subject to applicable law, this
Agreement may be amended, modified or supplemented only by a written agreement
signed by Buyer and Seller.
7.2 Waiver of Compliance; Consents.
7.2.1 Any failure of any party to comply with any obligation,
covenant, agreement or condition herein may be waived by the party entitled to
the performance of such obligation, covenant or agreement or who has the benefit
of such condition, but such waiver or failure to insist upon strict compliance
with such obligation, covenant, or agreement or condition will not operate as a
waiver of, or estoppel with respect to, any subsequent or other failure.
7.2.2 Whenever this Agreement requires or permits consent by
or on behalf of any party hereto, such consent will be given in a manner
consistent with the requirements for a waiver of compliance as set forth above.
7.3 Notices. All Notices, requests, demands and other communications
required or permitted hereunder will be in writing and will be deemed to have
been duly given when delivered by (i) hand; (ii) reliable overnight delivery
service; or (iii) facsimile transmission.
If to Buyer, to: 0000 X. Xxxxxxx Xxxxxx, Xxxxx Xxx, Xxxxxxxxxx
00000
If to Seller, to: 0000 X. Xxxxxxx Xxxxxx, Xxxxx Xxx,
Xxxxxxxxxx 00000
7.4 Titles and Captions. All section titles or captions contained in
this Agreement are for convenience only and shall not be deemed part of the
context nor effect the interpretation of this Agreement.
7.5 Entire Agreement. This Agreement contains the entire understanding
between and among the parties and supersedes any prior understandings and
agreements among them respecting the subject matter of this Agreement.
7.6 Agreement Binding. This Agreement shall be binding upon the heirs,
executors, administrators, successors and assigns of the parties hereto.
7.7 Attorneys' Fees. In the event an arbitration, suit or action is
brought by any party under this Agreement to enforce any of its terms, or in any
appeal therefrom, it is agreed that the prevailing party shall be entitled to
reasonable attorneys fees to be fixed by the arbitrator, trial court, and/or
appellate court.
7.8 Computation of Time. In computing any period of time pursuant to
this Agreement, the day of the act, event or default from which the designated
period of time begins to run shall be included, unless it is a Saturday, Sunday
or a legal holiday, in which event the period shall begin to run on the next day
that is not a Saturday, Sunday or legal holiday.
7.9 Pronouns and Plurals. All pronouns and any variations thereof shall
be deemed to refer to the masculine, feminine, neuter, singular or plural as the
identity of the person or persons may require.
7.10 Governing Law. THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF
THE PARTIES HERETO SHALL BE GOVERNED, CONSTRUED AND ENFORCED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF NEVADA. THE PARTIES AGREE THAT ANY LITIGATION RELATING
DIRECTLY OR INDIRECTLY TO THIS AGREEMENT MUST BE BROUGHT BEFORE AND DETERMINED
BY A COURT OF COMPETENT JURISDICTION WITHIN THE STATE OF NEVADA.
7.11 Arbitration. If at any time during the term of this Agreement any
dispute, difference, or disagreement shall arise upon or in respect of this
Agreement, and the meaning and construction hereof, every such dispute,
difference, and disagreement shall be referred to a single arbiter agreed upon
by the parties, or if no single arbiter can be agreed upon, an arbiter or
arbiters shall be selected in accordance with the rules of the American
Arbitration Association and such dispute, difference or disagreement shall be
settled by arbitration in accordance with the then prevailing commercial rules
of the American Arbitration Association, and judgment upon the award rendered by
the arbiter may be entered in any court having jurisdiction thereof.
7.12 Presumption. This Agreement or any Section thereof shall not be
construed against any party due to the fact that said Agreement or any section
thereof was drafted by said party.
7.13 Further Action. The parties hereto shall execute and deliver all
documents, provide all information and take or forbear from all such action as
may be necessary or appropriate to achieve the purposes of the Agreement.
7.14 Parties in Interest. Nothing herein shall be construed to be to
the benefit of any third party, nor is it intended that any provision shall be
for the benefit of any third party.
7.15 Savings Clause. If any provision of this Agreement, or the
application of such provision to any person or circumstance, shall be held
invalid, the remainder of this Agreement, or the application of such provision
to persons or circumstances other than those as to which it is held invalid,
shall not be affected hereby.
7.16 Confidentiality. The parties shall keep this Agreement and its
terms confidential, but any party may make such disclosures as it reasonably
considers are required by law or necessary to obtain financing. In the event
that the transactions contemplated by this Agreement are not consummated for any
reason whatsoever, the parties hereto agree not to disclose or use any
confidential information they may have concerning the affairs of other parties,
except for information which is required by law to be disclosed. Confidential
information includes, but is not limited to, financial records, surveys,
reports, plans, proposals, financial information, information relating to
personnel contracts, stock ownership, liabilities and litigation.
7.17 Costs, Expenses and Legal Fees. Whether or not the transactions
contemplated hereby are consummated, each party hereto shall bear its own costs
and expenses (including attorneys' fees), except as set forth in the Escrow
Agreement.
7.18 Severability. If any provision of this Agreement is held to be
illegal, invalid or unenforceable under present or future laws effecting during
the term hereof, such provision shall be fully severable and this Agreement
shall be construed and enforced as if such illegal, invalid or unenforceable
provision never comprised a part hereof; and the remaining provisions hereof
shall remain in full force and effect and shall not be affected by the illegal,
invalid or unenforceable provision or by its severance herefrom. Furthermore, in
lieu of such illegal, invalid and unenforceable provision, there shall be added
automatically as part of this Agreement a provision as similar in nature in its
terms to such illegal, invalid or unenforceable provision as may be possible and
be legal, valid and enforceable.
7.19 Counterparts and Facsimile Signatures. This Agreement may be
executed in one or more counterparts, each of which shall be deemed an original,
but all of which together shall constitute one and the same instrument. For
purposes of this Agreement, facsimile signatures shall be treated as originals
until such time that applicable pages bearing non-facsimile signatures are
obtained from the relevant party or parties.
7.20 Continuing Nature. All representations and warranties contained in
this Agreement shall survive the Closing for a period of two (2) years and, if
applicable, all covenants, which, according to their terms are to be performed
after the execution of this Agreement, shall survive the Closing for a period of
two (2) years.
IN WITNESS WHEREOF, the parties hereto have set their hands this 12th
day of January, 1999.
California Software Corporation California Software Products, Inc.
A Nevada Corporation (Buyer) A California Corporation (Seller)
by: /s/ Xxxxx Xxxxxx by: /s/ Xxxxx Xxxxxx
--------------------------------- ---------------------------------
Xxxxx Xxxxxx, President Xxxxx Xxxxxx, Vice President
EXHIBIT A
List of Assets
Exhibit A
California Software Products, Inc.
Detail of Assets
ASSETS
Current Asset
Int. Cash (10.00)
Cash in Bank 101,445.70
Cash-Credit Card (6,998.28)
CSPI Savings Account 251.88
CSPI Payroll Account 97,253.38
Payroll Tax Account 81.33
Cash in Bank - Newport Branch 150,692.90
Cash in Bank Operating Accounts $342,719.93
Money Market Account 80,272.94
Accounts Receivable 1,058,002.73
Less Returned Products Reserve (42,622.00)
Less Bad Debts Reserve (12,185.00)
Less Inventory on Consignment
Recorded as Accounts Receivable (192,504.00)
Accounts Receivable 810,691.73
Inventory on Consignment 192,504.00
Inventory 111,094.63
Less Reserves (1,001.23)
Inventory 110,093.40
Prepaid Items
Prepaid Expenses 4,551.00
Employee advances (250.55)
4,300.45
Other Current Assets
Deposits-building, utility, etc. 17,965.11
Foreign Taxes Deducted 636.00
Other current assets 18,801.11
------------
Total Current Assets 1,559,183.56
Property and Equipment
Furniture, Fixtures and Equipment 281,151.14
Less Depreciation (281,636.23)
Total Furniture, Fixtures and Equipment 62,314.91
Leasehold Improvements 12,281.00
Less Amortization (5,711.52)
6,569.45
Total Property and Equipment 68,884.39
OTHER ASSETS
Total Other Assets 0.00
TOTAL ASSETS $1,626,087.95
============
EXHIBIT B
Noncompetition Agreement
NONCOMPETITION AGREEMENT
This Noncompetition Agreement (the "Agreement") is made as of the 12th
day of January, 1999, by and between California Software Corporation, a Nevada
corporation ("Buyer"), and California Software Products, Inc., a California
corporation ("Seller").
RECITALS
A. Buyer and Seller have entered into an Asset Purchase Agreement dated
January 12th, 1999 (the "Purchase Agreement") under the terms of which Buyer has
agreed to purchase certain Assets of Seller, all as more fully set forth and
described in the Purchase Agreement.
B. Seller's delivery to Buyer of this Agreement is a condition to Buyer
consummating the transactions contemplated by the Purchase Agreement.
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants and agreements contained herein and in the Purchase Agreement, and
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereby covenant and agree as follows:
1. Noncompetition.
1.1 Seller covenants and agrees that for a period of five (5)
years from the date hereof, Seller will not engage in or carry on, directly or
indirectly, any business in competition with the business of Buyer relating to
the Assets that are the subject of the Purchase Agreement but only for as long
as such like business is carried on by (i) Buyer or any subsidiary or affiliate
of Buyer or (ii) any person or entity deriving title from Buyer of the Assets,
in any county in which Buyer or any of its subsidiaries or affiliates conduct
business, or in any other county or state of the United States, or in any
country or political subdivision of the world.
1.2 The term of the covenants contained in Section 1.1 hereof
shall be tolled for the period commencing on the date any successful action is
filed for injunctive relief or damages arising out of a breach by Seller of
Section 1.1 hereof and ending upon final adjudication (including appeals) of
such action.
1.3 If, in any judicial proceeding, the court shall refuse to
enforce all of the covenants contained in Section 1.1 hereof because the time
limit is excessive, it is expressly understood and agreed between the parties
hereto that for purposes of such proceeding such time limitation shall be deemed
reduced to the extent necessary to permit enforcement of such covenants. If, in
any judicial proceeding, the court shall refuse to enforce all of the covenants
contained in Section 1.1 hereof because it is more extensive than necessary to
protect the business and goodwill of Buyer, it is expressly understood and
agreed between the parties hereto that for purposes of such proceeding the
geographic area, scope of business or other aspect shall be deemed reduced to
the extent necessary to permit enforcement of such covenants.
1.4 Seller covenants and represents that Seller has no
interest in, or claim to, any of the procedures, written technical data,
computer software and related documentation, patents, copyrights, formulas,
methods, practices, statistics, trade secrets, trademarks, trade names, or
service marks relating to the Assets that are the subject of the Purchase
Agreement, and all knowledge or information of a confidential nature acquired at
or before the date hereof with respect to said Assets will be held in confidence
by Seller and will not be disclosed or made public or, except for the benefit of
Buyer, made use of, by or through Seller, directly or indirectly.
2 Governing Law. THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE
PARTIES HERETO SHALL BE GOVERNED, CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE
LAWS OF THE STATE OF NEVADA. THE PARTIES AGREE THAT ANY LITIGATION RELATING
DIRECTLY OR INDIRECTLY TO THIS AGREEMENT MUST BE BROUGHT BEFORE AND DETERMINED
BY A COURT OF COMPETENT JURISDICTION WITHIN THE STATE OF NEVADA.
3 Entire Agreement. This Agreement contains the entire understanding
between and among the parties and supersedes any prior understandings and
agreements among them respecting the subject matter of this Agreement.
4 Agreement Binding. This Agreement shall be binding upon the heirs,
executors, administrators, successors and assigns of the parties hereto.
5 Severability. If any provision of this Agreement is held to be
illegal, invalid or unenforceable under present or future laws effecting during
the term hereof, such provision shall be fully severable and this Agreement
shall be construed and enforced as if such illegal, invalid or unenforceable
provision never comprised a part hereof; and the remaining provisions hereof
shall remain in full force and effect and shall not be affected by the illegal,
invalid or unenforceable provision or by its severance herefrom. Furthermore, in
lieu of such illegal, invalid and unenforceable provision, there shall be added
automatically as part of this Agreement a provision as similar in nature in its
terms to such illegal, invalid or unenforceable provision as may be possible and
be legal, valid and enforceable.
IN WITNESS WHEREOF, the parties hereto have set their hands this 12th
day of January, 1999.
California Software Corporation California Software Products, Inc.
A Nevada Corporation (Buyer) A California Corporation (Seller)
by: /s/ Xxxxx Xxxxxx by: /s/ Xxxxx Xxxxxx
--------------------------------- ---------------------------------
Xxxxx Xxxxxx, President Xxxxx Xxxxxx, Vice President
EXHIBIT C
Commitments
